Qatar Airways buys 9.6% stake in Cathay Pacific

Qatar Airways is buying a 9.6% stake in Cathay Pacific for HK$5.16bn ($662m; £506m), giving the Middle Eastern airline more access to China's lucrative aviation market.

The deal will make the airline Cathay Pacific's third largest shareholder.

It is the first known investment by a Middle Eastern airline into an east Asian carrier.

China is the world's fastest growing aviation market and is set to be the largest by 2022.

Last month, the International Air Transport Association brought forward its forecast for when China would overtake the US as the world's largest aviation market by two years.

US carriers American Airlines and Delta have also tried to tap into the fast-growing market.

In March, American Airlines paid $200m for a near 3% stake in China Southern Airlines - the largest of China's three major state-owned carriers. Delta spent $450m for a 3.6% stake in China Eastern Airlines two years ago.

More than 400,000 Chinese mainland tourists travelled to Hong Kong during Golden Week

In a statement, the Hong Kong based airline said Air China and Swire Pacific would continue to hold nearly 75% of its shares.

Cathay Pacific chief executive Rupert Hogg said that as members of the Oneworld airline alliance, "we look forward to a continued constructive relationship".

Qatar Airways chief executive Akbar Al Baker said Cathay Pacific was "respected throughout the industry with massive potential for the future".

Mr Al Baker added the investment "further supports Qatar Airways investment strategy".

Qatar Airways' investments include:

• a 20% stake in Anglo-Spanish multinational airline IAG

• a 10% stake in South America's LATAM Airlines Group

• a 49% stake in the privately owned Italian airline Meridiana

But Greg Waldron, Asia Managing Editor for the online aviation website Flightglobal, said: "Qatar seems to invest in far flung assets with no clear synergies".

He added that "the network connectivity between Qatar and Cathay was not clear because both carriers operate from major hubs that are quite far apart".

While Qatar might see the Cathay investment as a way to tap into the growth in China's air travel market, Mr Waldron said this assumed, "that Cathay's restructuring and streamlining pays off, and that the company can return to profitability".

In August, Cathay Pacific reported an 82% drop in half-year profits amid fierce competition and the economic slowdown in China.

After falling nearly 5% early on Monday, Cathay Pacific's shares trimmed those losses to close 1.2% lower in Hong Kong on Monday.